Aurora Oil & Gas (AUT)

Shares of
Aurora Oil & Gas
touched their best levels in 16 years on Tuesday. In 2011, the stock is up 51 per cent and over the past 12 months it has surged more than 300 per cent. Expectations for prolonged strength in energy prices have no doubt contributed. Last year was a “break through" year for the company, with production commencing and averaging 686 barrels a day. But the company’s acreage in the lucrative Eagle Ford region in Texas has led some to consider it a potential target for corporate activity. In its annual presentation, the company noted that in 2010 there were more than $US5.5 billion worth of deals in the region, involving major energy companies such as Royal Dutch Shell, Talisman, Statoil and Reliance Industries. The stock is trading on a multiple of about 12 times 2012 earnings, which does not look excessive for a high growth story, and is a similar valuation to other explorers such as AWE Energy.